Many businesses are trimming payrolls by converting employees into independent contractors, but a Nov. 20 opinion by the North Carolina Court of Appeals suggests that they may have a harder time leveraging the gig economy to rid themselves of legal liability for their workers’ negligence.
Reach for Independence, a provider of services to disabled individuals, had contracted to pay Richard Charlton for roughly 40 hours a week of work as a “paraprofessional caregiver” providing one-on-one supervision of a particular client. While Charlton was using his own vehicle to transport his charge through Asheville in 2015, he struck and killed Yvonne Lewis as she was crossing a street.
The administrator of Lewis’ estate sued Charlton and RFI, the latter under a theory of respondeat superior, arguing that Charlton was acting as an employee of RFI when the accident occurred. Last year Buncombe County Superior Court Judge Casey Viser granted RFI’s motion for summary judgment, finding that Charlton was working as an independent contractor, and not an RFI employee.
But in a unanimous opinion, the Court of Appeals reversed and held that Lewis’ estate could proceed with its suit against RFI, saying that the vital question was not whether Charlton would be deemed an employee for tax purposes, but rather the degree of control RFI retained over the details of his work.
Judge Chris Dillon, writing for the court, said that for tort liability purposes, a worker is an independent contractor if he is accountable to his paymaster only for the result of his work, not for the manner in which he carries it out. Crucially, a worker is an employee if the employer retains the right to control the details of the work, regardless of whether the employer actually exercises this privilege.
On its surface, the tragedy bore some striking similarities to the Court of Appeals’ 1999 decision in Rhoney v. Fele, in which it ruled that a nurse who was involved in a fatal car crash while driving to a hospital was an independent contractor rather than an employee. But Dillon distinguished the two cases, finding that RFI had exerted a much greater degree of control over Charlton’s work.
“Specifically, the evidence shows that while Mr. Charlton was experienced in providing caregiving services to disabled clients, Defendant RFI was more than just a broker or middleman who placed caregivers with such clients,” Dillon wrote.
Dillon noted that, under their contract, Charlton had to provide services to whichever clients RFI placed with him, and RFI had the right to control and plan the type of services he provided. Charlton also had to consult with RFI regarding his care of clients and generally could only work with RFI clients. And importantly, Charlton was paid hourly, and his hours were fairly regular. As such, even though there were some factors that leaned in favor of an independent contractor relationship, the court held that RFI could still be held vicariously liable for the crash.
David Stradley of White & Stradley in Raleigh and Lakota Denton of Asheville represented the estate.
Denton said that there are thousands of paraprofessionals like Charlton working across the state, and argued that if RFI had prevailed under its theory, companies like itself would be immune from liability if such employees assaulted their clients, for example. He noted that, notwithstanding its arguments on appeal, RFI is actually required to train and supervise its paraprofessionals in order to get funding for their work from Medicaid.
“What the employer was trying to do, clearly, was call him an independent contractor in the contract, and that’s not determinative of someone being an independent contractor” for tort liability purposes, Denton said. “You can’t just call someone an independent contractor in a contract and be able to walk away from liability.”
Ann Rowe of Davis & Hamrick in Winston-Salem represented RFI. Rowe declined to comment on the ruling, citing the ongoing nature of the case.
The 18-page decision is McKenzie v. Charlton (Lawyers Weekly No. 011-349-18). The full text of the opinion is available online at nclawyersweekly.com.
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